Construction Agreement--seadrift Coke, L.p.

EXHIBIT 10.40


[LOGO OF FOSTER WHEELER USA CORPORATION]


FOSTER WHEELER USA CORPORATION
2020 DAIRY ASHFORD . HOUSTON, TEXAS 77077 . PHONE 281-597-3000


September 25, 1997
Letter No.: 13-037624 - 2.1 - 104
File No.: 37624 - 2.1


Mr. Jim Trigg General Manager Seadrift Coke L.P. P.O. Box 192 Port Lavaca, Texas 77979


SUBJECT: Seadrift Coke L.P.
Port Lavaca, Texas
Coker Expansion Project
SEADRIFT COKE L.P./FWUSA ENGINEERING, PROCUREMENT AND
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CONSTRUCTION AGREEMENT FOR COKER EXPANSION PROJECT
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Dear Jim,


Please find attached one fully executed original of the subject Agreement for your files.


Very truly yours,
/s/ Mike Veit
Mike Veit
Project Manager


MV:sw


cc: M. Autrey
I. Bremner
D. Pettit
J. Archambault, Esq.


ENGINEERING, PROCUREMENT, AND


CONSTRUCTION AGREEMENT


BETWEEN


SEADRIFT COKE, L.P. AND


FOSTER WHEELER USA CORPORATION


FOR


COKER EXPANSION PROJECT


INDEX
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ARTICLE DESCRIPTION - ------- -----------


1 DEFINITIONS 2 SERVICES BY FWUSAC 3 SERVICES BY OWNER 4 PRICE 5 TERMS OF PAYMENT 6 RELATIONSHIP OF THE PARTIES 7 PRICE ADJUSTMENT 8 CHANGES IN THE WORK 9 TIME OF PERFORMANCE 10 INSURANCE 11 INDEMNIFICATION FOR BODILY INJURIES AND PROPERTY DAMAGES 12 TITLE AND RISK OF LOSS TO MATERIALS & EQUIPMENT 13 RECORDS AND ACCOUNTING 14 MECHANICAL ACCEPTANCE; COMPLETION OF THE WORK


15 GUARANTEES AND WARRANTIES 16 INDEMNIFICATION AGAINST PATENT INFRINGEMENT 17 INDUSTRIAL PROPERTY RIGHTS 18 LIEN INDEMNIFICATION 19 CONTINUOUS PROSECUTION OF THE WORK 20 FORCE MAJEURE 21 CONSEQUENTIAL DAMAGES 22 ASSIGNMENT OF AGREEMENT 23 SUBCONTRACTING 24 WAIVER 25 NOTICES 26 SUSPENSION OF THE WORE 27 TERMINATION OF THE WORK 28 CAPTIONS 29 CONTROLLING LAW 30 SEVERABILITY 31 ENTIRETY OF CONTRACT


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EXHIBIT DESCRIPTION - ------- -----------


A SCOPE OF WORK B COMPENSATION BASIS C PROJECT SCHEDULE D PLANT COMPLETION STANDARD


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THIS Agreement (hereinafter "Agreement") is made effective the 2nd day of June, 1997, hereinafter ("EFFECTIVE DATE") between SEADRIFT COKE, L.P. (hereinafter "OWNER"), a Texas limited partnership, with its principal offices at Port Lavaca, Texas and FOSTER WHEELER USA CORPORATION (hereinafter "FWUSAC"), a Delaware corporation, with its principal offices at Perryville Corporate Park, Clinton, New Jersey.


WITNESSETH


WHEREAS, OWNER desires to have constructed a COKER EXPANSION PROJECT (hereinafter referred to as the "Plant") on its real property located at the OWNER's Seadrift, Texas facility;


WHEREAS, OWNER desires FWUSAC to undertake the performance of certain required engineering, procurement, and construction work and services for the Plant; and


WHEREAS, FWUSAC desires to undertake the performance of said work and services for the Plant;


NOW, THEREFORE, the parties hereto, in consideration of their respective obligations, undertakings and commitments hereinafter set forth, covenant and agree as follows:


1. DEFINITIONS


Wherever used in this Agreement or in the other Contract Documents, hereinafter defined, the following terms have the meanings indicated which are applicable to both the singular and plural thereof:


1.1 "Agreement" or "Contract" means the Agreement between the parties hereto covering the Work to be performed as represented and constituted by the Contract Documents, which are attached to the Agreement and made a part thereof.


1.2 "Completion of Construction" means FWUSAC has:
a) Provided erection in accordance with the drawings and
specifications;
b) Completed its portion of the pre-commissioning Work;
c) Completed final cleanup, painting and insulation Work; and
d) Delivered all required documentation to the OWNER.


1.3 "Construction Aids" means any or all materials, supplies, and temporary facilities and such other items as are required for construction of the Plant, but which are not intended to become a permanent part of the Plant.


1.4 "Contract Documents" means and includes this Agreement with all its Exhibits, attachments and all Specifications, Drawings, Modifications and Appendices hereto.


1.5 "Contract Price" means the total of the amounts to be paid to FWUSAC pursuant to this Agreement.


1.6 "Drawings" means all drawings which show the character and scope of the Work to be performed and which have been produced by or for FWUSAC in the design, construction, and erection of the Plant.


1.7 "Equipment" means any and all material, supplies, equipment and facilities of whatever nature designed or specified by FWUSAC hereunder and intended to become a permanent part of the Plant.


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1.8 "Modification" means (1) a written amendment to the Contract Documents signed by both parties hereto or (2) a Change Order as provided for in Article 8 herein.


1.9 "Plant" or "Project" means the COKER EXPANSION PROJECT and related equipment and systems to be built at OWNER's Seadrift, Texas facility.


1.10 "Project Completion" means Final Acceptance of the Plant has been achieved.


1.11 "Ready for Commissioning" means the Plant, unit, facility, or part thereof has been erected in accordance with the drawings, specifications and applicable codes, to the extent necessary to permit commissioning, and pre-commissioning activities have been completed by FWUSAC as detailed in Exhibit E.


1.12 "Site" means the land and other places on, under, in or through which the Plant is to be constructed which includes real property located at the OWNER's Seadrift, Texas Facility.


1.13 "Specifications" means those portions of the Contract Documents consisting of written technical descriptions of materials, equipment, construction systems, standards and workmanship as applied to the Work and certain administrative details applicable thereto produced by or for FWUSAC in furtherance of the design, construction, and erection and maintenance of the Plant.


1.14 "Subcontractor" means an individual, firm or corporation having either a direct contract with FWUSAC or a contract executed by FWUSAC as OWNER's agent, or any other lower-tier Subcontractor who performs any part of the design or any part of the Work at the Site.


1.15 "Vendor "means any third party supplying any Equipment or Construction Aids to FWUSAC with or without the services of supervision of installation at the Site, but without installation labor at the Site.


1.16 "Work" means the entire completed construction of the Plant or the various separately identifiable parts thereof required to be furnished under the Contract Documents and is the result of performing services, furnishing labor and furnishing and incorporating materials and Equipment into the Plant all as required by the Contract Documents.


1.17 "Mechanical Completion Date" shall mean the date of completion of erection of the respective unit or section of the Plant, exclusive of insulation and painting.


1.18 "Work in Progress" shall mean all portions of the Work and all equipment, supplies, and materials to be incorporated into the Work, or intended or earmarked for the Project, while in transit to the Site or while stored in and off the Site.


1.19 "Mechanical Acceptance" has the meaning defined in Subarticle 14.1.


1.20 "Final Acceptance" has the meaning defined in Subarticle 14.2.


1.21 "FWCI" shall mean Foster Wheeler Constructors, Inc., which is FWUSAC's construction subcontractor.


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2.0 SERVICES BY FWUSAC


FWUSAC shall exercise all reasonable skill, care and diligence in the
performance of the WORK under the Agreement and shall carry out all his
responsibilities in accordance with recognized professional standards in
the United States of America. FWUSAC shall in accordance with the
provisions of this Agreement perform the following services as required for
construction of the Plant, as defined in Exhibit A:

2.1 Furnish home office engineering services consisting of process and
equipment engineering, mechanical design, procurement and general
engineering services as, and to the extent, required for construction
of the Plant to be performed by FWUSAC, including the placement of the
subcontract for construction to FWCI


. FWUSAC procurement services shall include equipment inquiries, bid
evaluations and inspection services to the extent approved by OWNER.


2.1.1 Under FWUSAC's construction subcontract to FWCI, FWCI shall be
responsible for providing the required construction management
and supervisory personnel, craft personnel on a direct hire
basis, subcontract services as required, small tools,
construction equipment, construction procedures, and
construction of the Plant.


2.2 Inspect all Equipment required for the Plant to the extent FWUSAC
deems necessary,


2.3 Furnish required supervisory construction personnel and other required
personnel including construction subcontract services; Construction
Aids, small tools, construction equipment and the like, not furnished
by construction subcontractors; and construct the Plant.


2.4 Prior to Ready for Commissioning, supply OWNER with:


a) The final tracings, and electronic file copies prepared by
FWUSAC for the Plant.


b) Five (5) sets of Mechanical Catalogs containing bulletins,
information and data furnished by Vendors; key drawings and data
prepared by FWUSAC, all and to the extent set forth in attached
Engineering Standard of Exhibit A .


c) Five (5) sets of Process Technical Specifications.


2.5 Obtain all license and permits required to be obtained in FWUSAC's
name for performance of the Work.


2.6 Nothing in this Agreement shall operate to prevent FWUSAC carrying out
similar WORK for other clients.


2.7 Appoint one or more individuals who shall be authorized to act on
behalf of FWUSAC and with whom OWNER may consult at all reasonable
times, and whose instructions, requests, and decisions will be binding
upon FWUSAC as to all matters pertaining to the Services to be
rendered under this Agreement as defined below.


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3.0 SERVICES BY OWNER


OWNER shall perform the following services in connection with the work, without cost to FWUSAC:


3.1 Provide all necessary basic design data and any other engineering
services except as otherwise provided herein. This shall include, but
not be limited to, necessary soil bearing data and foundation design
criteria, topographical surveys, benchmarks for design and
construction, and identification of any hazardous, latent, hidden or
other conditions not discoverable by visual inspection (walk-through)
of the property at grade level.

3.2 Procure all necessary permits, licenses, easements, rights of way, and
a clear and level site free of any above and below grade obstructions,
other than those obstructions identified on Owner's drawings of the
Site, provided to FWUSAC in the course of performing the Work as
required for construction and operation of the Plant other than the
permits and licenses to be obtained by FWUSAC pursuant to Article 2.


3.3 Issue all purchase orders in OWNER's name for all Equipment and
materials to be incorporated into the plant, based on requisitions and
/ or bills of materials prepared by FWUSAC and / or FWCI. Procure all
necessary know-how, engineering agreements and patent licenses
required for the Plant other than those to be obtained by FWUSAC
pursuant to Article 2.


3.4 Provide a clear, well-drained, fenced and policed security area for a
Construction Storage area, unloading area, and piping fabrication
area.


3.5 Provide a clear and well-drained Construction Parking area.


3.6 Provide a finished surface road from the construction parking area to
the main work road.


3.7 Grade and maintain the construction road and access roads to the Work
site within the OWNER's property.


3.8 Furnish, consistent with FWUSAC's construction schedule the completely
furnished and equipped existing building for (a) the control room
wherein FWUSAC shall install the instrumentation and interconnections
thereto for the instrumentation of the Plant; and (b) the existing
electrical control room wherein FWUSAC shall, receive the 5 kV and 480
kV power and install the electrical switch gear and motor control
centers and the interconnections thereof required for the Plant.


3.9 Provide, in a safe and ready for service condition, all new, and /or
modified existing equipment, piping and materials of OWNER and its
subcontractors and vendors to which FWUSAC must tie-in, or provide
interface connections, or incorporate in the Plant, in the performance
of FWUSAC's Work, including that performed by FWUSAC's Subcontractors.


3.10 Provide clear access to the Battery Limits, all temporary facilities
as required for construction of the Plant, and provide a location for
disposal of waste material.


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3.11 Furnish and install all fire-fighting equipment and piping and
controls for same. Furnish all Utilities and other materials at the
battery limits of the Plant at quantities and conditions as required
for construction and testing purposes, including any necessary fill
or dirt, compressed air, petroleum feedstocks, coke, natural gas,
fuel oil, electricity, testing water and potable water, and
telecommunication connections.


3.12 Furnish all tools, record sheets, log tables, laboratory and testing
facilities, instrument charts, spare parts, catalysts, chemicals,
solvents, feedstocks and any other consumable supplies for
maintenance and operation, including testing of the Plant.


3.13 OWNER shall assume care, custody and control of the Plant and parts
thereof after they are Ready for Commissioning. Thereafter, in
association with FWUSAC and its Subcontractors, and in accordance
with Exhibit D hereof, OWNER will provide all maintenance, labor,
materials and utilities necessary to maintain, operate and test the
Plant, and any unit, or parts thereof. Furnish all labor, including
standby labor during start-up; and materials and utilities required
for maintenance and operation of the Plant from the date of Ready
for Commissioning.


3.14 OWNER shall provide such approvals as are required under the terms of
this Agreement in such reasonable time as not to delay or disrupt the
performance of the WORK.


3.15 OWNER shall negotiate and obtain at its cost all necessary licenses
or other approvals that may be required in respect of the WORK from
the relevant Government and other Authorities, which are not
required to be obtained by FWUSAC under Article 2.6 above.


3.16 Appoint one or more individuals who shall be authorized to act on
behalf of OWNER, with whom FWUSAC may consult at all reasonable
times, and whose instructions, requests, and decisions will be
binding upon OWNER as to all matters pertaining to this Agreement and
to the performance of the parties hereunder.


4.0 PRICE


4.1 OWNER agrees to pay FWUSAC in the manner, and as designated in
Article 5.0 hereof as full and complete compensation for FWUSAC's
services under this Agreement, the sum of the following amounts;
all the costs and charges incurred in performance of the Work,
including but not limited to the costs of engineering services,
procurement services, funding of Equipment (if required), and
construction of the Plant in accordance with Exhibit B.


4.2 FWUSAC's rates and prices are exclusive of any taxes, duties and/or
levies whatsoever which may be or become payable outside the United
States in respect of the WORK or in connection therewith (such as,
but not limited to, corporate or personal income tax, withholding
tax, and any and all sales, export, import, VAT, and other similar
taxes and duties).


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5.0 TERMS OF PAYMENT


5.1 The amounts payable to FWUSAC pursuant to Subsection 4.1, as
adjusted, shall be due and payable in accordance with the basis
set forth in Exhibit B, including all reimbursable costs and fees
earned for Work performed during the previous month and chargeable to
OWNER under this Agreement, upon OWNER's receipt of FWUSAC's monthly
invoices therefor. Provided however, Invoices for field construction
labor shall be submitted on a weekly basis, and paid by OWNER on a
weekly basis though a zero balance account. Charges for home office
personnel and salaried personnel on the site will be invoiced on a
monthly basis. All payments shall be made, within 30 days of receipt
of invoice by OWNER and shall be made in US Dollars to FWUSAC's
designated bank in New Jersey. The invoice shall be accompanied by
itemization of all items of reimbursable costs, and other documents
to support invoices. Payment by OWNER to vendors and subcontractors
for purchase orders and subcontracts shall be in accordance with
their respective terms and approved by FWUSAC as being in conformity
therewith.


5.2 OWNER agrees that payments due to FWUSAC shall be paid in full,
free of any withholdings.


6.0 RELATIONSHIP OF THE PARTIES


6.1 For purposes of this Agreement and all services to be provided
hereunder, FWUSAC shall be considered an independent contractor.


6.2 Neither FWUSAC nor any subcontractor, nor the employees of either
shall be deemed to be the servants, employees, or otherwise the
agents of OWNER and is without power of authority to act on behalf
of OWNER to incur any liability on OWNER's account.


7.0 PRICE ADJUSTMENT


The Price specified in Subarticle 4.1 shall be adjusted as a change in
the Work, for the following causes:


7.1 Increases in the design capacity of the Plant by the addition of
and/or replacement of any major items of Equipment specified in the
attached Exhibit A.


7.2 Changes by OWNER to the design set forth in Exhibit A.


7.3 In the event OWNER requires the purchase of equipment other than
Equipment selected by FWUSAC.


7.4 Overtime work in FWUSAC's home or branch offices or at the job
site, including payroll taxes and insurance premiums computed on such
premiums; provided such overtime is undertaken by FWUSAC with
OWNER's written authorization.


7.5 Costs and charges resulting from a decrease in the length of the
work week required by law or area practices which become effective
after the effective date of this Agreement.


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7.6 Alterations in, additions to, or deletions from the Plant which are
requested by OWNER or required by the OWNER's Insurance Carriers, or
soil bearing data, foundation and earthwork or other design criteria
being at variance with that contained in Exhibit A.


7.7 Increases or decreases in the costs and charges to FWUSAC resulting
from any change in OWNER's safety or loss-prevention procedures.


7.8 Interferences with continuous prosecution of the Work or from
suspension of the Work by OWNER or Force Majeure causes except
strikes or other concerted acts of workmen or disputes with workmen.


7.9 Costs and charges for changes in the Work as set forth in the
Agreement but not above specified.


8.0 CHANGES IN THE WORK


8.1 OWNER shall have the right at any time prior to Mechanical
Acceptance of the Plant, to request alterations in, additions to or
deletions from the Work. In each case, FWUSAC shall promptly
prepare and submit to OWNER a detailed estimate of the net effect
of such change on the Contract Price, and on the reimbursable costs
set forth in Article 4 hereof and including the cost of preparation
of the estimate whether on a lump sum, time and material, or
reimbursable rate basis. Upon approval of the estimate by OWNER, the
said Contract Price shall be adjusted by the amounts set forth in
such estimate.


In the event that OWNER elects not to have the change effected
after FWUSAC's preparation of the estimate as set forth herein,
OWNER shall pay to FWUSAC the costs and charges occurred in
preparation of the estimate.


8.2 In the event any changes in laws, rules, regulations, (including
taxes) applicable FWUSAC's performance of the Work, occur after the
effective date of this Agreement, such changes shall result in a
Change in the Work for the benefit of FWUSAC.


8.3 In the event Changes in the Work affect FWUSAC's guarantees
hereunder and OWNER requires FWUSAC to implement such Changes,
FWUSAC's guarantee shall be modified accordingly.


8.4 If a Change in the Work causes a revision in the time required for
achieving Mechanical Completion of the Plant, the contemplated date
of completion shall be accordingly adjusted.


9.0 TIME OF PERFORMANCE


FWUSAC shall promptly commence the Work and with its best efforts, and
endeavor to attain Mechanical Completion of the Plant on or about
, 1998. If FWUSA fails to meet the mutually agreed upon
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Mechanical Completion Date, the sole remedy of the Owner and the sole
liability of FWUSAC, shall be that OWNER shall retain, and FWUSAC shall
forego receipt, of the schedule component of the at-risk fee associated
the achievement of agreed upon the Mechanical Completion Date.


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10.0 INSURANCE


10.1 FWUSAC shall obtain and maintain during the performance of the Work
hereunder the following insurance:


10.1.1 Workmen's Compensation Insurance and Employer's Liability
Insurance in accordance with the laws of the state in which
FWUSAC may be required to pay compensation, with limits for
Employer's Liability of $1,000,000 per accident or diseases,
aggregate as to disease.


10.1.2 Commercial General Liability including Contractual Liability,
Products, Completed Operations, covering claims for bodily
injury, including death, and damage to property, with
combined single limits of $1,000,000 for bodily injury and
property damage per occurrence /aggregate.


10.1.3 Automobile Liability Insurance with a combined single limit
for bodily injury and property damage of $1,000,000.


10.1.4 Excess Liability Insurance, in excess of the coverages under
Articles 10.1.2 and 10.1.3, which in combination with the
coverages under Articles 10.1.2 and 10.1.3 shall have a
combined single limit of US $5.000,000 per occurrence
/aggregate.


10.2 OWNER shall obtain and maintain during the performance of the Work
hereunder the following insurance:


10.2.1 Builder's All-Risk Insurance including inland transportation
covering all Equipment, material, machinery, and structures
intended to become a permanent part of the Plant and temporary
facilities used in or incidental to performance of the
Work, while in transit to the Job Site, awaiting and during
erection, and until Final Acceptance, shall be maintained by
the OWNER, with a deductible of (One-Hundred Thousand Dollars)
$100,000. FWUSAC shall be responsible for the deductible of
$100,000 under the OWNER's Builder's All-Risk Insurance for
claims due to the negligence of FWUSAC and its subcontractor,
Foster Wheeler Constructors, Inc. OWNER will waive its
insurer's rights of subrogation under this policy.


10.3 The insurance to be provided pursuant to Subarticle 10.1 and
Subarticle 10.2 shall be subject to the normal limitations and
exclusions applying to each type of policy of ...